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Smials

"In a hole in the ground there lived a Hobbit. Not a nasty, dirty, wet hole, filled with the ends of worms and oozy smell, nor yet a dry, bare, sandy hole with nothing in it to sit down on or to eat: it was a hobbit-hole and that means comfort."

For generations the Hobbits, made diggings in the earth to live. By the later Third Age the poorest Hobbits still went on living in burrows of the most primitive kind with only one window or none.

For the most well-to-do hobbits, smials were luxurious versions of those primitive diggings of old. Their tunnels had rounded walls and branched to other rooms.[1] Smials included Bag End and the smials along Bagshot Row of Hobbiton, the Great Smials of Tuckborough[2] and Brandy Hall.[3] The latter two were large enough to have ample room for a hundred Hobbits.

When suitable sites for these large and ramifying tunnels were not everywhere to be found, many Hobbits lived in wood, brick or stone houses.[1] This was the case with some muddy regions of the Eastfarthing, such as the Marish.[4]

"Smials. A word peculiar to hobbits (not Common Speech), meaning 'burrow'; leave unchanged. It is a form that the Old English word smygel 'burrow' might have had, if it had survived. The same element appears in Gollum's real name, Sméagol."